Key Takeaways
- • Southern Europe (Spain, Italy, Portugal, Greece) achieved €35 billion ($41 billion) in real estate transaction volumes in 2025, an all-time high representing 24% growth above 2024 levels, signaling sustained investor appetite.
- • Oxford Economics forecasts 2026 GDP growth of 2.4% for Spain, 2.1% for Portugal, and 1.8% for Greece—significantly outpacing the EU-27 average of 1.0%—providing structural support for occupier demand and investment sentiment.
- • Savills identifies four core structural drivers of Southern Europe's outperformance: a deepening investable universe (particularly in care homes, senior housing, and student accommodation), sustained tourism-led demand, lower e-commerce exposure in retail, and favorable office and logistics dynamics relative to core European markets.
- • Higher domestic renewable energy penetration in Southern Europe reduces exposure to imported energy shocks and improves operating-cost visibility for occupiers, a material differentiator in volatile geopolitical conditions affecting energy-sensitive sectors.
- • Regional investor allocation is shifting from "satellite" to "strategic exposure," with cross-border investors increasingly treating Southern Europe as a core European allocation rather than opportunistic positioning, according to Savills leadership.
Summary
Southern Europe's real estate markets are experiencing sustained momentum underpinned by macroeconomic outperformance and structural market deepening, according to research from Savills. The region's 2025 transaction volumes reached €35 billion across Spain, Italy, Portugal, and Greece—an all-time record and 24% above 2026 levels—demonstrating investor conviction despite broader European uncertainty. Looking forward, Oxford Economics projects regional GDP growth will substantially exceed EU averages: Spain at 2.4%, Portugal at 2.1%, and Greece at 1.8%, compared with an EU-27 average of just 1.0%. This economic outperformance is expected to sustain real estate occupier demand and investor sentiment throughout 2026.
Savills identifies four structural factors driving the region's relative strength. First, the investable asset universe is deepening, particularly in non-traditional sectors including care homes, senior housing, and student accommodation—segments increasingly attractive to institutional capital seeking yield-generative, demographically-driven assets. Second, Southern Europe benefits from sustained tourism-led demand that provides stable cash flows and occupancy support across hospitality and mixed-use properties. Third, the region's retail sector exhibits lower e-commerce penetration than Northern European counterparts, preserving physical retail fundamentals. Fourth, office and logistics market dynamics appear more favorable than in several core markets, suggesting operational advantages for occupiers and stable returns for investors.
Energy infrastructure represents an additional strategic differentiator. Higher domestic renewable energy penetration in Southern Europe—particularly in Spain and Portugal—reduces occupier exposure to imported energy shocks and improves long-term operating-cost visibility. This structural advantage is material in volatile geopolitical conditions and supports business confidence in energy-sensitive sectors, a tangible benefit to leasing decisions and tenant retention.
James Burke, Director of Global Cross Border Investment at Savills, noted that investor positioning has fundamentally shifted: "After an exceptionally strong 2025, we expect momentum in the region to continue this year, albeit at a more moderate pace. Investors aren't just chasing a bounce in the South, they're underwriting a cleaner demand story and a deeper opportunity set as the Mediterranean shifts from 'satellite allocation' to 'strategic exposure' in European portfolios." This reframing suggests institutional allocators are moving beyond tactical, crisis-driven positioning to strategic capital deployment. Jaime Pascual-Sanchiz, CEO of Savills Iberia, emphasized that "Southern Europe has gained significant market share and sits firmly on cross-border investors' radar," underscoring the region's establishment as a core venue for European real estate capital.
Savills identifies four structural factors driving the region's relative strength. First, the investable asset universe is deepening, particularly in non-traditional sectors including care homes, senior housing, and student accommodation—segments increasingly attractive to institutional capital seeking yield-generative, demographically-driven assets. Second, Southern Europe benefits from sustained tourism-led demand that provides stable cash flows and occupancy support across hospitality and mixed-use properties. Third, the region's retail sector exhibits lower e-commerce penetration than Northern European counterparts, preserving physical retail fundamentals. Fourth, office and logistics market dynamics appear more favorable than in several core markets, suggesting operational advantages for occupiers and stable returns for investors.
Energy infrastructure represents an additional strategic differentiator. Higher domestic renewable energy penetration in Southern Europe—particularly in Spain and Portugal—reduces occupier exposure to imported energy shocks and improves long-term operating-cost visibility. This structural advantage is material in volatile geopolitical conditions and supports business confidence in energy-sensitive sectors, a tangible benefit to leasing decisions and tenant retention.
James Burke, Director of Global Cross Border Investment at Savills, noted that investor positioning has fundamentally shifted: "After an exceptionally strong 2025, we expect momentum in the region to continue this year, albeit at a more moderate pace. Investors aren't just chasing a bounce in the South, they're underwriting a cleaner demand story and a deeper opportunity set as the Mediterranean shifts from 'satellite allocation' to 'strategic exposure' in European portfolios." This reframing suggests institutional allocators are moving beyond tactical, crisis-driven positioning to strategic capital deployment. Jaime Pascual-Sanchiz, CEO of Savills Iberia, emphasized that "Southern Europe has gained significant market share and sits firmly on cross-border investors' radar," underscoring the region's establishment as a core venue for European real estate capital.
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